Shares of Woodward (NASDAQ:WWD) soared 52.3% in the first half of 2019, according to data provided by S&P Global Market Intelligence, as the aerospace-component manufacturer benefited from the continued surge in orders for new commercial jets.
Woodward's wild ride began in the first few days of 2019, when trade publication Dealreporter speculated that the company could be a target of Boeing or another buyer. The company, which traces its roots back to the 1870s, is a maker of speed governors, synchronizers, and other aerospace products for the commercial and military sectors, generating annual sales of about $2.1 billion.
Boeing has been consolidating its supply chain, and reports of the aerospace giant's potential interest have surfaced from time to time over the years, but nothing definitive came from the reports.
Woodward has shown it can perform well on its own. The company, in late January, raised its dividend by 14% and has twice so far in 2019 delivered quarterly results that beat expectations. Wall Street has noticed, and in April, William Blair analyst Nicholas Heymann initiated coverage with an outperform rating. He wrote that Woodward is "exceptionally well positioned" to deliver double-digit earnings growth.
Heymann said the stock had the potential to jump 20% this year. His prediction ended up being conservative.
Given how far Woodward shares have climbed in a short period of time, it's only natural to ask how much further the stock can run. SunTrust analyst Michael Ciarmoli asked that question in late June, downgrading Woodward and other aerospace names to hold from buy.
Ciarmoli is worried that the issues surrounding the Boeing 737-MAX will "ripple across the sector" over the next two years, impacting aerospace supply chains and causing estimates to eventually come down.
There's a lot of uncertainty about when the 737-MAX will get back on track and how long the commercial aerospace rally can last. Woodward is a well-run company, but it seems unlikely the stock will repeat its first-half performance.